This is a CU Colorado Springs student blog for the following courses: Intermediate Microeconomics and Austrian Economics.

November 12, 2014

Let's discuss minimum wage

What is the relationship between an employee and an employer? An employer is consuming labor from employees that supply it; their trade off is an agreed wage in which the employer compensates the employee for their labor. That is it for the most part.

If an employee does not like the amount that they are being paid, then they should have a choice to find work somewhere else. However, some people are unable to find higher paying work because they are under qualified to work in many places for numerous reasons. So the employee can either become qualified to work elsewhere or go into business for his or herself.
Some people believe that we should use the force to have a minimum wage because it is "fair" and instills "social justice". This is a foolish idea for people who do not have what they call a "livable wage". By having a minimum wage, employers will have less money to hire people, and the current amount of people that are working for that employer may be laid off because the employer does not have enough money to pay its workers. This is what the 15Now movement does not understand.
If these people are able to raise the minimum wage to 15 dollars and hour, then not only will currently unemployed people in that area have a harder time finding work, but there is a very likely chance that the companies effected by this will have massive layoffs so that their costs of production do not out-weigh the revenue they gain.
If there was no minimum wage and wages are drastically decreased, then the entire market would be effected by this. The reason why is this: if consumers don't have money to buy anything, then businesses cannot sell anything. Eventually, the only businesses that could survive are the ones that lower their prices along with their wages. This is a direct relation between wages, prices and unemployment. This also has the opposite affect if there is a minimum wage.
This means that minimum wages drive prices up, so that business can profit, and they increase unemployment. If the 15Now movement really cares about "social justice" and "livable wages" they should not focus on raising the minimum wage as this would have the opposite affect on people who are already struggling.